AFRY (Buy, TP: SEK200.00) - Market headwinds set to remain

In Q3, low capacity utilisation and weak demand in real estate, parts of Industrial & Digital Solutions (IDS) and Process Industries (PI) weighed on EBITA. However, the Infrastructure turnaround continued. Capacity utilisation was flat YOY excluding PI. We reiterate our BUY but have cut our target price to SEK200 (230) on market weakness in pulp & paper, real estate and IDS.

More questions than answers after Q3

Uncertainty remain after weak Q3

Hafnia Minor model adjustments

We have updated our estimates owing to the Q3 report and Q4 guidance. Hence, we have raised our 2024e EBITDA by 1%, while we have lowered our 2025–2026e by 2–1%. We continue to be positive on the tanker space, and forecast an 18–19% earnings yield for 2025–2026. Combined with its LTV now being below the 20% threshold for a 90% payout ratio, this should bode well for capital returns through dividends and/or accretive buybacks (we estimate a P/NAV of 0.7x). We do not consider these changes to be material, and we have not changed our BUY recommendation. We reiterate our NOK96 target price.

The weekly navigator

From the past week, we highlight: 1) Kinnevik led a USD130m funding round in Enveda; 2) Latour continues delivering on its M&A agenda; 3) Lundbergs reported Q3 NAV was up 7% QOQ, as the Lundberg sphere tightens its grip on Industrivärden; and 4) we met VEF, following its portfolio company BlackBuck’s recent IPO.

Kindred Group (No_rec, TP: SEK) - Discontinuing coverage

We have discontinued coverage of Kindred Group following the delisting of the stock after the acquisition by Française des Jeux. Our last published recommendation, target price and estimates should no longer be relied upon.